Tamil Nadu DISCOM Ordered to Clear Outstanding Dues of Another Wind Power Generator

The Tamil Nadu Electricity Regulatory Commission (TNERC) has directed the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) to pay ₹132.8 million (~$1.76 million) in dues, including interest at 12% per annum to a wind developer within 30 days from the issuance of the order.

Wind Urja India had filed a petition with the Commission to direct the state distribution company (DISCOM) to pay the outstanding principal amount along with the late payment interest amounting to ₹167.05 million (~$2.22 million) as per the terms of the energy purchase agreement (EPA).

Background

In 2013, Wind Urja India approached TANGEDCO to sell 12 MW of energy generated from its 15 wind generators installed in Tamil Nadu. TANGEDCO accepted the proposal and agreed to buy 12 MW of wind energy from it. The wind generator signed 15 energy purchase agreements (EPAs) with TANGEDCO on September 6, 2010. The agreed tariff for the supply of power was set at ₹3.39 (~$0.045)/kWh.


Per the terms of the said EPAs, the petitioner has been supplying wind energy generated to TANGEDCO since September 2013 without any interruption.

Wind Urja India said that it had not been paid for the energy supplied under the EPAs since October 2017 despite no dispute concerning any of the invoices.

The wind generator added that the DISCOM had failed to honor the monthly invoices raised for the wind energy supplied from October 2017. Accordingly, as of December 11, 2019, ₹135.12 million (~$1.79 million) as the principal amount was due.

Per the EPA, TANGEDCO was required to make payment of the amounts due under the energy bills within 30 days from the date of the receipt of the petitioner’s monthly energy bills. If the payment was delayed beyond the due date, interest at the rate of 1% per month would be payable.

Accordingly, it was also entitled to late payment interest amounting to ₹17.08 million (~$227,089) as the outstanding late payment interest that had accrued on the unpaid energy bills from September 01, 2017, to December 27, 2019.  TANGEDCO had also accrued late payment interest against the invoices raised from October 2010 to August 2017.

The respondent had not taken steps to clear the dues amounting to ₹167.05 million (~$2.22 million).

TANGEDCO, in its reply, said that due to a shortage of power in Tamil Nadu, it had to purchase power at a higher rate from other sources, which led to the financial crisis. Some payments were postponed, and others were made when loans were received from financial institutions.

“Despite severe financial constraints faced by the TANGEDCO, sincere efforts are being made in clearing the pending bills of the wind energy generators,” DISCOM said.

Commission’s Analysis

The Commission observed that the wind generator had been supplying wind energy to TANGEDCO since September 2013 without interruption. But the DISCOM had made payments only up to September 2017.

The regulator said that TANGEDCO, in the compliance report, had submitted that it had paid the interest dues at 6% as agreed by the wind generator. However, Wind Urja India denied the contention of TANGEDCO that it had agreed to a reduced interest rate of 6% by way of settlement.

The Commission said that an amount of ₹132.8 million (~$1.76 million) against the original claim of ₹167.05 million (~$2.22 million) was due to be paid by TANGEDCO. The regulator stated that the petitioner accepted that it had received the payment of ₹33.47 million (~$445,003) against the total claim.

The Commission noted that the DISCOM had not disputed its liability to pay the outstanding dues and had pleaded financial constraints as the reason for not making the payment in time.

“In the above circumstances, TANGEDCO is directed to verify the claim made by the petitioner and, after deducting the amount already paid, settle the same within 30 days from the date of this order together with interest at 12% per annum,” the Commission noted.

Recently, in a similar order, TNERC directed TANGEDCO to pay $164.95 million (~$2.18 million) in outstanding dues and interest at the rate of 12% per annum to a wind developer within 30 days from the date of the issuance of the order.

Earlier, the Tamil Nadu Commission had directed TANGEDCO to pay wind generators about ₹74.2 million (~$1 million) in delayed wind power dues along with interest at 12% per year.

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